UPDATE: It was my power supply causing the issue. It could play normal games fine but the neosd caused weird issues. i swapped to a 9v sega CD power supply temporarily till i can source a suitable replacement.
I have a 9v AES so the official SNK power supply is ideal. I am trying to find and alternative that will work. The sega CD power supply is starting to do the same thing. I dont think it puts out enough amps